Nov. 25 (Bloomberg) -- Juan Orlando Hernandez, a lawyer and
former head of Congress, is leading the presidential election in
Honduras over the wife of ousted former President Manuel Zelaya,
with both candidates claiming victory.

With 54 percent of precincts reporting, the ruling National
Party’s Hernandez had about 34 percent of the votes cast in
yesterday’s election, compared with 29 percent for Xiomara
Castro, the country’s electoral tribunal said last night in its
final update of the evening. There is no second round vote in
Honduras, so whoever gets the most votes wins. The head of the
European Union’s observer mission said voting was “peaceful and
transparent” amid record turnout.

During the campaign, Hernandez and Castro vowed to address
crime fueled by drug gangs that have made Honduras the most
violent nation in the world, according to the United Nations.
Castro, whose husband was forced out of the country at gunpoint
in 2009, was also seeking to break a century-long hold on the
presidential palace by the country’s two traditional parties.
Hernandez, 45, said people wanted to move on from the coup.

“The Honduran people voted to leave the 2009 crisis, the
worst Honduras has ever had, behind,” Hernandez told supporters
in the capital, Tegucigalpa, yesterday. He vowed to use the
military to “regain peace and calm” in the country.

More results will be available today, the electoral
tribunal said, without giving further details.

Investor Bets

Investors wary of Zelaya’s former alliance with late
Venezuelan President Hugo Chavez have fueled a rally in Honduran
bonds since September, when polls started showing Hernandez
gaining on Castro, who led earlier this year.

Honduras’s dollar bonds have returned 2.5 percent this
month, compared with a 2.9 percent decline in Latin American
debt over the same period, according to JPMorgan Chase & Co.’s
EMBIG index.

Before the partial official results were announced, Castro
claimed a “decisive and irreversible” victory at a rally with
supporters, saying she had 29 percent of the vote. During the
campaign, she criticized President Porfirio Lobo’s efforts to
deploy more military police to the streets to curtail violence,
saying escalating crime in the country of 8.3 million people
showed that the government’s policies were ineffective.

Bordered by Nicaragua, El Salvador and Guatemala, Honduras
has a murder rate of more than 80 per 100,000 inhabitants, the
highest in the world, according to the UN. The U.S. State
Department estimated that last year about 90 percent of all
cocaine smuggling flights departing South America for the U.S.
first land in Honduras, where illegal airstrips abound in poorly
patrolled parts of the country.

Report of Violence

Five people were killed near a polling site in the eastern
La Mosquitia region yesterday before voting began, according to
newspaper El Heraldo.

The government said it would deploy 14,000 soldiers and
police to safeguard the election, while about 800 international
observers were monitoring the vote. Lobo was barred from seeking
re-election.

Economic growth in the $19 billion economy has slowed to an
average 3.2 percent per year since the 2009 coup, compared with
a 5.7 percent average in the four years before, according to the
International Monetary Fund.

The polarization in the country since the coup means “it’s
going to be difficult for whoever wins to govern,” said Geoff
Thale, director of the Washington Office on Latin America.